Honda to close UK factory for two months

Honda, the Japanese car-maker, is to close its UK factory during February and
March as it slows production amid plunging sales.

Honda to close UK factory for two months Photo: PA

By Graham Ruddick

10:05AM GMT 21 Nov 2008

Output at the company’s Swindon site, which manufactures the Honda Civic, will be cut by 21,000 vehicles as part of proposals to cut global production by 79,000.

The 4,800 staff employed at the UK factory will receive full basic pay during the 50 days the factory is closed.

The move by Honda comes as car-makers around the world fall into crisis because of the rapid fall in the demand for new cars.

New figures from the Society of Motor Manufacturers and Traders (SMMT) showed car production fell by 25pc in October to the lowest levels since 1991 as car-makers responded to the economic downturn and lack of available credit – which has made consumers wary of buying a new car.

Paul Everitt, the SMMT chief executive, warned that further falls in output were likely before the end of 2008.

“The figures are evidence of the scale of the challenge facing the industry and underline the need for prompt action in next week’s pre-Budget report to assist the sector during this difficult period,” he said.

In the US, the world’s largest motor market, car sales are at their lowest level for more than 17 years – leading to the General Motors, Ford and Chrysler, the so-called ‘big three’, pleading for a $25bn (£17bn) bail-out as concerns grow about their survival.

Honda had already announced it was cutting production by 32,000 units in the UK between December and next March and the latest decision was taken because of "a dramatic change in the global automobile market". The company said there were no plans for redundancies.

The cuts mean the company's UK production for the financial year will be 175,000, 23pc lower than the initial forecast.

The other cuts in production will be in Japan, 40,000, and the US, 18,000. The reduction in output in Japan lowers next year's scheduled production to 1.28m units – 1pc lower than last year.